Demographic changes that increase the number of people in the lending phase (for example, age 50 to 75) and reduce the number in the borrowing phase (under age 50), will
A) increase the demand for loanable funds relative to supply and lead to lower interest rates.
B) reduce the demand for loanable funds relative to supply and lead to higher interest rates.
C) increase the supply of loanable funds relative to demand and lead to lower interest rates.
D) decrease the supply of loanable funds relative to demand and lead to lower interest rates.

Question

Quizplus · Accepted Answer

As more people enter the lending phase, the supply of loanable funds increases relative to demand, leading to lower interest rates.

Demographic Changes That Increase the Number of People in the Lending